Is this situation a no-go?

I met this guy I had been talking to last night. Everything seemed to check out great UNTIL... he mentioned he had a friend with benefits. He seemed interested in me and even wants to see me on Monday but I'm not too inclined to anymore after that. I think he knows my disposition changed after he told me about the friends with benefits because he was very accommodating and caring after. I quickly made up a reason I had to get home and he hugged me. I came home to a message saying how he is so happy to meet me and how much he still wants to get to know me and all of this on Monday. I think he likes who I am but still the friends with benefits situation bothers me.
Is this situation a no-go?
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